Inheritance Tax Faces Radical Overhaul – Miles Dean
Miles Dean, Head of International Tax, comments in relation to the news that MPs have called for radical changes to inheritance tax.
“A cross-party group of MPs has recommended radical changes to inheritance tax, which could lead to lower bills for estates caught by IHT. But the proposed shake-up to the nation’s most-hated tax would also see the loss of certain loopholes which many people currently use to pass on their wealth….
Currently, inheritance tax is charged at 40% on an estates once they cross the tax-free threshold of £325,000. The All-parliamentary Group on Inheritance and Intergenerational Fairness (APGG) is proposing slashing this to 10%. But the seven-year rule, a popular method for parents and grandparents to gift substantial sums tax-free to their relatives, could be scrapped.
One of these incentives in MPs sight is what’s known as the “main residence nil-rate band”, which in the current tax year is worth £150,000 when a home is passed on to a direct descendant in a will. This is reduced for estates over £2m, however, Miles Dean, head of international tax at Andersen Tax UK says the overall changes to the IHT system are welcome but not changes to this housing exemption. He thinks the loss of the seven-year rule exemption is an acceptable trade-off if the overall IHT rate drops from 40% to 10%.”